Fraud losses rise as Italian banks face growing security challenges

By Divya Shah

Why it matters: Rising fraud losses are increasing pressure on banks to modernise detection systems, improve investigations and strengthen customer protection.

Key takeaways

• Fraud attempts and losses are increasing across Italian banking institutions.

• Social engineering and mule account activity remain major threats.

• Malware, manual investigations and system integration are key areas of concern.

Italian banks are facing growing pressure from rising fraud attempts, increasing financial losses and the need to strengthen their fraud prevention capabilities, according to a new survey by BioCatch.  

The research, A Survey of Banking Leaders on Fraud Risk: 2026 Italy Edition, found that fraud was becoming a greater concern for institutions as digital payments and instant transfers changed the speed at which money could be moved. 

The survey found that 65% of Italian banking leaders had seen an increase in fraud attempts at their organisations over the previous 12 months, while 68% reported rising fraud losses.  

More than three-quarters said their institutions lost over $10 million to fraud annually, the highest proportion among the 12 markets included in the wider study. 

Social engineering was identified as the most common fraud threat, with 53% of respondents placing it among their organisation’s top three concerns. These scams typically involve criminals manipulating customers into authorising transactions or disclosing sensitive information. 

Mule account activity was the second most frequently cited threat, appearing among the top three concerns for 49% of respondents. Synthetic identity fraud and first-party fraud were also identified as significant risks. 

The channels used to initiate scams are changing. More than half of respondents identified other phone applications, including gaming and dating platforms, among the leading sources of social engineering scams.  

Messaging applications, including WhatsApp and Telegram, were also prominent, particularly in job scams and wrong-number messages that can develop into romance or investment fraud. 

Although 81% of respondents considered their existing fraud controls effective, only 29% described them as very effective. The survey also highlighted lengthy investigation processes: 91% said fraud investigations took more than a day to complete, with almost one-third reporting that they took longer than two days. 

Malware was the most frequently cited gap in fraud detection capabilities, identified by 52% of respondents. Other concerns included money mule detection and visibility into beneficiary accounts. 

At the operational level, manual investigations were the most commonly reported challenge, followed by a lack of system integration and high alert volumes. These findings point to the difficulty banks face in investigating suspicious activity while managing growing volumes of transactions and alerts. 

The expansion of real-time payments is another concern. The survey found that 78% of Italian banking leaders believed real-time Single Euro Payments Area (SEPA) credit transfers would increase fraud risk at their organisations. 

Regulatory changes are also shaping banks’ priorities. The forthcoming Payment Services Directive 3 (PSD3) and Payment Services Regulation (PSR) are expected to introduce stricter fraud liability standards, including reimbursement requirements for certain types of social engineering fraud. 

Italian institutions appear to be preparing for these changes. The survey found that 73% were already planning or implementing adjustments to their reimbursement policies, while a further 24% were monitoring regulatory developments before making changes. 

Investment in fraud prevention is also underway, with more than half of respondents actively evaluating, procuring or implementing new solutions. However, 12% reported no current plans to upgrade their controls. 

The findings suggest that Italian banks will need to strengthen real-time detection, improve investigation efficiency and address gaps in existing systems as fraud risks and regulatory responsibilities evolve.